First lien loan pricing spikes in June in tandem
with secondary market collapse
Source: Markit, BofA US HY Index
To open the year, loans were bid at an average price of 97.78, with approximately 20% of loans bid in the par-plus range. As inflation numbers started coming in hot, and as the war in Ukraine erupted on 24 February, bids slid more than 6 points to only 91.48, with barely 1% of loans trading at par or better. This is the lowest level of trading for loans since August 2020, when the market was still recovering from lockdowns imposed during the onset of the coronavirus (COVID-19) pandemic.
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